Who Should Pay for the BP Oil Spill?

Let's look past the vitriolic finger pointing at BP and get to the heart of the BP oil spill.

First, the reasons for the blowout espoused by the media are great at casting blame, but not technically sound. First the media reported that BP did not run any liner casing, a common practice in most wells of any depth or risk, offshore or land. Then the media reported the BP used insufficient casing centralizers on its liner casing, which supposedly BP did not run. Then the media forgot to tell its readers that centralizers really have nothing to do about properly working blowout preventers. But anything to make BP look reckless is what gets in the print.

Second, the petroleum industry has been in the Gulf of Mexico for 50 years and drilled thousands of wells. The very few disasters (i.e. two) are a testament to the professionalism of the industry. How many workers, professional or otherwise, can claim this sense of excellence in their own jobs?

Third, drilling for petroleum offshore is always a risky venture. It can never be made 100% safe. If we want to extract the resources, sooner or later, something like this is bound to happen as men and machines move into the frontiers of petroleum extraction.

Managing disasters has always been fraught with criticism from those on the sidelines who obviously know better than the authorities put in charge. But we should acknowledge that BP has owned up to its responsibility and reacted to the situation the best it knew how.

This proactive approach will help BP in the upcoming inquiry into this disaster. BP already knows that this inquiry will find that BP more or less worked within government regulations and within the norms of the industry—regardless of whatever the blame-seeking media and politicians are saying today.

The inquiry will likely find that the regulations were insufficient for the risk involved. But is this BP's fault—when it has to compete against other petroleum companies also working just inside the rules?

Why were the regulations so insufficient? Here's a good reason: we, the people, want lots of petroleum, and we want it cheap, and we want a stable supply. As we add regulations to petroleum extraction, we increase the cost, sometimes up to the point where it is no longer feasible for petroleum companies to invest. So to get the oil we want, we subtly encourage our politicians not to hinder petroleum exploration too much: keep the regulations minimal to keep lots of oil flowing! In other words, we, the people, should take a big shoulder of blame for the BP oil spill because we, the people, created the demand and we, the people, also determined the level of regulations for frontier petroleum exploration.

One way to acknowledge our share of the blame would be a significant tax on gasoline to pay for the cleanup. But will we do this? Not while we can conveniently put 100% of the blame on an oil company! Higher gasoline taxes, however noble the cause, would be political suicide for politicians seeking re-election. Miles of oil-stained beaches will not raise the ire of voters as long as there is a scapegoat.

The right thing is to admit that we want the oil and we have to go to risky places to find it. And if the small chance of a disaster happens, we should be willing to pay the price of that disaster. But western democracy is often good at neither assessing appropriate risk levels nor properly assigning blame.